THIRD AMENDMENT TO FOURTH
AMENDED
AND RESTATED CREDIT AGREEMENT
This Third Amendment to Fourth Amended and
Restated Credit Agreement (this “Third Amendment”)
dated as of April 30, 2009, is by and among PARALLEL
PETROLEUM CORPORATION, a Delaware corporation
(“Borrower”), and CITIBANK, N.A., BNP PARIBAS,
WESTERN NATIONAL BANK, COMPASS BANK, BANK OF SCOTLAND plc, TEXAS
CAPITAL BANK, N.A., BANK OF AMERICA, N.A. and WEST TEXAS
NATIONAL BANK (collectively, “Lenders”), and
CITIBANK, N.A., as Joint Lead Arranger and as Administrative
Agent (“Agent”) and BNP PARIBAS, as Joint Lead
Arranger and as Syndication Agent.
WHEREAS, Borrower and Lenders in the capacities
stated above, entered into that certain Fourth Amended and Restated
Credit Agreement dated as of May 16, 2008, as amended by First
Amendment to Fourth Amended and Restated Credit Agreement dated as
of October 31, 2008, and by Second Amendment to Fourth Amended
and Restated Credit Agreement dated effective as of
December 31, 2008 (the “Credit
Agreement”).
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the parties hereto agree as
follows:
Section 1 . Definitions . Except as otherwise
expressly provided herein, all terms defined in the Credit
Agreement shall have the same meanings herein.
Section 2 . Amendment to Definition of Base Rate
Margin . The definition of “Base Rate Margin” in
Section 1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
(a) one-half percent (0.50%) per annum
whenever the Borrowing Base Usage is equal to or greater than 75%;
or
(b) one-quarter percent (0.25%) per annum
whenever the Borrowing Base Usage is equal to or greater 50% but
less than 75%; or
(c) zero percent (0%) per annum whenever
the Borrowing Base Usage is less than 50%.
Section 3 . Amendment to Definition of LIBOR Margin
. The definition of “LIBOR Margin” in Section 1 of
the Credit Agreement is hereby amended in its entirety to read as
follows:
(a) three and one-quarter percent (3.25%)
per annum whenever the Borrowing Base Usage is equal to or greater
than 75%; or
(b) three percent (3.00%) per annum
whenever the Borrowing Base Usage is equal to or greater than 50%
but less than 75%; or
(c) two and three-quarters percent (2.75%)
per annum whenever the Borrowing Base Usage is less than
50%.
Section 4 . Amendment to Funded Debt Ratio Covenant
. Section 13(c) of the Credit Agreement is hereby amended in its
entirety to read as follows:
(c) Funded Debt Ratio . Borrower will not
allow its ratio of Consolidated Funded Debt to Consolidated EBITDA
to exceed (i) 4.00 to 1.00 as of June 30, 2008 and
September 30, 2008, (ii) 4.25 to 1.00 as of
December 31, 2008, (iii) 5.00 to 1.00 during the year
2009, (iv) 4.25 to 1.00 during the year 2010, or (v) 4.00
to 1.00 during the year 2011 and thereafter during the term hereof.
This ratio shall be calculated at the end of each fiscal quarter of
Borrower using the results of the twelve-month period immediately
preceding the end of each such fiscal quarter.
Section 5 . Redetermination of Borrowing Base . In
accordance with Section 7(b) of the Credit Agreement, a semi-annual
redetermination of the Borrowing Base has been made by Lenders.
Pursuant to Section 7(b) of the Credit Agreement, Agent hereby
notifies Borrower that Lenders have redetermined the Borrowing Base
and, effective as of the date of this Third Amendment, the
redetermined Borrowing Base is $230,000,000. The amount of the new
Borrowing Base shall be subject to redetermination as provided in
the Credit Agreement. The next scheduled semi-annual
redetermination of the Borrowing Base by Lenders pursuant to the
Credit Agreement shall be on or about October 1,
2009.
Section 6 . Representations and Warranties of
Borrower . Borrower represents and warrants to Lenders as
follows:
(a) The representations and warranties
contained in Section 10 of the Credit Agreement are true and
correct on and as of the date hereof as though made on and as of
the date hereof, except for those representations and warranties
which address matters only as of a particular date (which remain
true and correct as of such date).
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(b) No Event of Default or Default has
occurred and is continuing under the Cre
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